The cocaine trade

Pop quiz: Which drug is the main target of the American War on Drugs?
If you answered "cocaine" (as you should have, considering the title of this node), you get a cookie.

"Why cocaine?" you ask. First of all, it's a highly profitable business: cocaine costs very little to produce, and sells for astronomical sums of money. Second, cocaine is very addictive, and its use as a stimulant is widespread among white collar types who wouldn't touch other drugs. Finally, the coca plants that make cocaine only grow in three countries—Colombia, Bolivia, and Peru—which happen to border on each other, making them a convenient target for counterdrug forces.

The cocaine industry is in the hands of a few drug cartels, who control its manufacture and shipment, but not necessarily its retail sale. Most of it—95 percent or so—is manufactured in the mountains and jungles of Colombia. The chemicals needed to extract cocaine from coca are relatively cheap and easy to obtain: gasoline, acetone, etc. Likewise, no sophisticated machinery or laboratory equipment is needed: the labs in which cocaine is manufactured are often built in open huts or trailers.

Keeping in mind that a kilogram of cocaine costs thousands of dollars, it's easy to see that moving even a small amount of cocaine can net high profits, and moving a large amount can reap massive profits. Some methods that have been used in the past and present:

Shipping it in Learjets, or stowing it away in hidden compartments on airliners

Since it is, after all, a powder, cocaine can be concealed in just about anything imaginable. If you've seen the movie Traffic, you'll also know that it can be reprocessed into less-detectable forms, and then turned back into its snortable form once it reaches its destination.

The United States government estimates that almost 300 metric tons of pure cocaine enter the United States each year, out of 400 mt produced in Colombia and Peru. The 100 mt not accounted for are consumed, lost, or seized along the way, or sent to other countries. (Cocaine's popularity is pretty much a North American phenomenon: Europe's addicts prefer heroin. It is estimated that Europe's annual consumption of coke is less than 50 mt, while Asian and African consumption together account for less than 2 mt. Nor is cocaine very popular in South America: locals there prefer to make less potent coca tea out of the leaves.)

Once cocaine gets past the United States Southern Command, through Customs, and into America, it must then be distributed for sale on the street. The major drug cartels all have surprisingly sophisticated warehousing and wholesale systems, centered around key entry points in Miami, LA, and New York City. Miami, being the closest American major city to Colombia, is where cocaine is in the greatest supply, and where it is cheapest (around $10,000-$15,000 a kilo). In LA and New York, prices range from $15,000-$20,000 a kilo, and as you get farther from the supply centers, prices continue to rise. In the Midwest and Pacific Northwest, pure cocaine is known to be traded at upwards of $35,000 a kilo, and I would assume that once you get up into northern Saskatchewan, prices are even steeper.

However, most cocaine you're likely to buy from the friendly neighborhood dealer is not pure. Instead, it is "cut" with another white powdery substance, often at several stages in the supply chain. Testing the purity of cocaine is something that many consumers aren't able or willing to do, so they never notice that their coke is mixed with baking soda, sugar, or bathroom cleaner.

Finally, the money the cartels make from their operations goes into a money laundering process, where it passes through some sort of small business cover and into the drug lords' pockets. Hotels, nightclubs, and stores are common ways to hide the money from the government.

So where does the DEA fit into all this, you ask? Most cocaine produced in Colombia makes it into its user's nasal cavity without being lost to the feds. Because it's so easy to conceal and ship, virtually all cocaine busts made between Bogota and Yellowknife come from an informant of some kind, who tells the feds what to look for and when to look for it. Only on the rarest of occasions will a blind hit uncover drugs in transit.

American policy in the drug war has mostly consisted of stopping up certain perceived weak points in the network of links between Colombia and the US. For instance, shortly after the government figured out that smugglers were using Puerto Rico as an easy way into the States, the United States Navy ran a blockade of the island. Then, like a balloon covered in oil, the smugglers slipped around Puerto Rico and started stopping on Hispaniola in large numbers.

So if you're smart, and you pick your friends very carefully, cocaine can be an extremely profitable business. Of course, unless you happen to be a native of Medellin, it can be a hard industry to get into on the entry level.